A new report from Ernst & Young reveals companies should change their localization strategies when they wish to enter the Asian market. A focus on consumer value and a balanced strategy are needed to become successful on this emerging market.
According to the National Post, the role of the emerging Asian markets is changing and have now become the engine behind the growth of companies selling global consumer products (CP) and retailers. To seize this opportunity, the recently launched Profit or lose executive summary by Ernst & Young advises companies to alter their approach to localization and employ a greater local autonomy, granularity, focus and agility.
For the report, 276 senior executives based in China and are working for leading CP companies and retailers in eight different markets were surveyed. 69% of these participating executives believed the emerging markets will be the main source behind growth and profit in the next three years. Only 20%, however, had already reaped the fruits of this.
With regards to the report, Ernst & Young’s Global Consumer Products Emerging Markets Leader Kristina Rogers says: “The pace of change in Asia is dizzying. Consumerism has matured over a short span of years rather than the decades witnessed in developed markets. Global companies stalking growth in Asia are finding the well-established local and multinational players tough competition. Global companies need to be agile and light on their feet, by putting consumer value first and foremost, in order to win over the increasingly sophisticated and demanding Asian consumer.”
“Balance” is the key word when turning to Asia for some much-needed profit. In the report, eight business imperatives are stated that must be managed simultaneously by CP companies and retailers to become successful players on the Asian market.
Andrew Cosgrove, Ernst & Young Global Consumer Products Lead Analyst, also adds that “Profitable growth does not mean cutting costs. Global CP companies need to adopt a selectively localized portfolio approach across all the elements of the supply chain from conception to consumption. Whilst this approach incurs higher costs in terms of time and resources, versus a universal approach, it is a price that companies must be prepared to pay in order to capture profitable growth.”
Concluding, Rogers shares her views on the future of Global CP companies that are aiming for the Asian market: “Today’s high performers are adopting a ‘pay as you go’ approach, with profits reinvested locally to generate even more profit and sustainable growth. By 2016, emerging Asia will account for almost a quarter of global consumer products markets and 37% of total consumer products growth. Companies wanting to win in Asia must adopt a highly disruptive approach to managing their business through selective localization and above all, flawless execution.”
It is clear that companies definitely should not overlook Asia as a market to sell their products. It might require some research, time and money, but according to Ernst & Young, this will pay off in the long run.
Click here for more information about the Ernst & Young report